Mortgage Pre-Approval Tips from CSE Experts

Buying a home is a memorable and huge experience that many people dream about. But, buying a home isn’t something you should do ‘on the fly’, rather something you should do mindfully with good research, consideration, and financial stability.

It’s important that you, and your co-borrower if you have one, do ample know what it is you’re looking for in a home exactly. Talk about it, and make sure you’re on the same page. Once you’ve done this, then it may be time to look to a lender you trust and begin steps toward your mortgage preapproval.

Here are tips from our CSE Mortgage Experts on preparing for home-buying and the pre-approval process:

1. Check your free annual credit report in order to review your credit history. Request copies of your credit reports, and dispute any errors. If you find delinquent accounts, work to resolve the issues before applying for a mortgage pre-approval.
   • You can get one free credit report a year from each of the three main credit bureaus at AnnualCreditReport.com


2. Have a general discussion with a mortgage loan officer at a lender you trust, or are considering getting your mortgage through, at least 6-12 months before you plan on buying a home. This will help you understand the process and what you need to do to prepare for home buying and getting pre-approved.


3. You’ll need money for a down payment and closing costs. Verifying that you have sufficient funds in your account is a very important piece of the pre-approval process.
   • Note: Cash is NEVER acceptable for a down payment.


4. Your loan down payment must be in your account for at least 60 days. If there are any recent, large deposits, this must be from an acceptable source and you’ll likely need to provide proof of where the funds came from. Discuss this with your mortgage lender to better understand why and what would qualify as an ‘acceptable source’.


5. You will be asked to provide a number of documents, so it’s best to be prepared to save time and frustration. Gather these documents beforehand for yourself and your co-borrower. These documents may include:
   • Social Security Numbers
   • Current Address(s)
   • Employment Information
   • Pay Stubs (typically previous 30 or 60 days)
   • W-2s and 1099’s (typically previous two years)
   • Bank Statements (typically previous 60 days)
   • Income Tax Returns (typically previous two years)
   • Copies of current/valid driver’s license or government ID
   • Any documents related to a change in your name or marital status
   • Any documents related to bankruptcy
   • Any documents related to social security award, or pension award
   • Any documents related to child support payments


6. Have an idea of how much you can afford for a monthly mortgage payment. This may be similar to what you pay in rent currently. Always remember to consider additional costs and maintenance of owning a home when calculating what you can afford.


7. When ‘shopping’ it’s best not to react to “the perfect house” or let realtors and lenders push you into buying before you are positively ready for this major decision. There are hundreds or even thousands of homes for sale at any given time so it’s best to keep your options open and don’t feel pressured.


8. Consider all types of homes. From fixer-uppers, new construction, and more. It’s also a good idea to think about what comes with each. For example, a fixer-upper could mean a money pit, or it could provide a more affordable way to turn a house into your dream home. Where a new home you’d be putting your money upfront for cost but in the long run you can have confidence in the home being stable. It’s truly best to discuss this with your partner, or trusted sources before buying.


9. Avoid opening new debt or credit lines. This can include buying new appliances or furniture via a loan or new credit card, financing a new car, or cosigning someone’s loan. The reason for this is because opening new trade lines affects your credit and also, potentially, monthly cash flow and debt-to-income ratio. Both of these are major items that a mortgage lender looks at when underwriting your mortgage loan. If your credit has major changes, the lender will have to re-write the entire pre-approval. It’s best to avoid doing this until after you close your loan. Your credit will be checked again right before closing your mortgage loan to ensure you have not taken on any new debts or that your credit score hasn’t changed enough to affect pre-approval.


10. Stay at your job until your mortgage loan is closed. Sticking with your employer while going through the home buying process is crucial because your income is the bread to your loan. If there are any changes in your income (aka your employment) it could stop or significantly delay the process. If there is no getting around leaving your current employment, expect the delay of your mortgage loan as the lenders will likely need to reevaluate your finances to see if you still qualify.

There are likely some other questions you may have in today’s world of mortgage lending. If so, we encourage you to reach out to a CSE Mortgage Loan expert! They will be able to answer questions, provide you options and explore with you whether you’re ready for homeownership or not.

If you’re ready to finance your next home, apply online today or schedule an appointment to talk to one of our mortgage experts.